The G7 DFIs, the IFC, EBRD and the European Investment Bank (EIB) have committed to invest Ksh. 8.62 trillion ($80 billion) in the private sector over the next five years. The investment is aimed at supporting sustainable economic recovery and growth in Africa.
The announcement is a welcome boost to support the long-term development objectives of African economies that have been negatively impacted by the COVID-19 pandemic. It is the first time the G7 DFIs have come together to make a collective partnership commitment to the African continent.
The IMF estimates that sub-Saharan Africa requires an additional financing of around Ksh. 45.8 trillion ($425 billion) between now and 2025. This estimate financing is expected strengthen the pandemic response spending and reduce poverty in the region.
Commenting on the funding, UK Minister for Africa, James Duddridge, said, “The UK is proud to back this commitment by world leaders at the G7 Summit to invest more than Ksh. 8.62 trillion ($80 billion) in Africa’s private sector over the next 5 years. This investment will create jobs, boost economic growth, help tackle climate change and fight poverty. It comes at a crucial time as the continent rebuilds its economies, severely impacted by COVID-19.”
Nick O’Donohoe, the CEO of CDC Group, said, “The patient, high quality capital that DFIs provide is urgently needed if African economies are to start to rebuild quickly from the impact of the pandemic. CDC is committed to building long term investment partnerships in Africa that fuel sustainable private sector growth in support of the UN’s Sustainable Development Goals.”
Makhtar Diop, IFC’s Managing Director, said, “Ensuring an inclusive and sustainable recovery for people, businesses and economies across Africa in coordination with our development partners, is at the core of IFC’s development mandate today. We know that the private sector will play a major role in financing Africa’s future by creating millions of jobs that are essential to ensuring sustained economic growth and poverty reduction.”
Each DFI has its own investment criteria which are aligned to an assessment of need to achieve development impact across a range of sectors.
The G7 DFI group consists of CDC, Proparco (France), JICA and JBIC (Japan), DFC (US), FinDev Canada (Canada), DEG (Germany) and CDP (Italy). This commitment is also supported by the IFC, the Africa Development Bank, the European Bank for Reconstruction and Development and the European Investment Bank.